Consider total cost and total revenue given in the following:
(Quantity/Total Cost/Total Revenue):
(0/8/0), (1/9/8), (2/10/16), (3/11/24), (4/13/32), (5/19/40), (6/27/48), (7/37/56)
Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?
Isn't this firm a competitive industry since the price is equal to the marginal revenue?
This is obviously a competitive industry because the average revenue is always the same. But the euqilibrium is not the long run euilibrium because at the equilibrium average cost and average revevue are not equal to each other.
This is obviously a competitive industry because the average revenue is always the same. But the euqilibrium is not the long run euilibrium because at the equilibrium average cost and average revevue are not equal to each other.
To determine whether this firm is in a competitive industry and whether the industry is in long-run equilibrium, we need to analyze the given information.
In a competitive industry, firms are price-takers, meaning they cannot influence the market price and must accept the prevailing market price. One characteristic of a competitive industry is that the price is equal to the marginal revenue.
To determine whether the firm is in a competitive industry, we can compare the price and marginal revenue in the given information. Looking at the "Total Revenue" column, we can see that the values for the total revenue increase by 8 units with each successive quantity. This indicates that the marginal revenue is constant at 8.
Now, let's look at the "Total Cost" column. The values for total cost increase with each successive quantity, indicating that the average cost is increasing.
Since the marginal revenue is constant and equal to 8, and the average cost is increasing, we can conclude that this firm is operating in a competitive industry.
However, to determine whether the industry is in long-run equilibrium, we need to compare average cost and average revenue. In the given information, we don't have the values for average cost. Without knowing the values for average cost, we cannot determine whether the industry is in long-run equilibrium.
Therefore, based on the given information, we can conclude that the firm is operating in a competitive industry, but we cannot determine whether the industry is in long-run equilibrium.